can help you remove your Private Mortgage Insurance

When getting a mortgage, a 20% down payment is usually the standard. The lender's liability is generally only the difference between the home value and the sum due on the loan, so the 20% provides a nice buffer against the expenses of foreclosure, reselling the home, and regular value variations in the event a purchaser defaults.

The market was accepting down payments down to 10, 5 and often 0 percent during the mortgage boom of the mid 2000s. A lender is able to endure the additional risk of the small down payment with Private Mortgage Insurance or PMI. This additional plan protects the lender in the event a borrower defaults on the loan and the market price of the home is lower than the balance of the loan.

PMI can be expensive to a borrower because the $40-$50 a month per $100,000 borrowed is bundled into the mortgage payment and frequently isn't even tax deductible. Opposite from a piggyback loan where the lender absorbs all the losses, PMI is profitable for the lender because they collect the money, and they receive payment if the borrower doesn't pay.

How can a buyer avoid bearing the cost of PMI?

The Homeowners Protection Act of 1998 requires the lenders on most loans to automatically eliminate the PMI when the principal balance of the loan reaches 78 percent of the beginning loan amount. Wise home owners can get off the hook beforehand. The law promises that, at the request of the homeowner, the PMI must be abandoned when the principal amount reaches only 80 percent.

It can take countless years to arrive at the point where the principal is just 20% of the initial amount borrowed, so it's crucial to know how your home has grown in value. After all, all of the appreciation you've acquired over the years counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% mark? Your neighborhood might not be adhering to the national trends and/or your home might have secured equity before things simmered down, so even when nationwide trends hint at plunging home values, you should understand that real estate is local.

An accredited, licensed real estate appraiser can help home owners understand just when their home's equity rises above the 20% point, as it's a difficult thing to know. As appraisers, it's our job to keep up with the market dynamics of our area. At , we know when property values have risen or declined. We're experts at recognizing value trends in , Clark County and surrounding areas. When faced with figures from an appraiser, the mortgage company will often do away with the PMI with little effort. At which time, the home owner can relish the savings from that point on.

Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year